College Financial Aid Fact Sheet

You or your child is applying to college or is currently enrolled—congratulations! The next step for many families is to apply for financial aid, which can be confusing and daunting. If you are applying to college for the first time, you will have noticed that many schools require families to submit financial aid information before acceptances are determined.

Financial aid can be tricky to navigate alone, especially when national student debt is collectively at $1.41 trillion and the average student in 2016 graduated with $37,172 in debt. The more information families have proceeding forward the better. Below is a general outline for next steps, what to consider, and links to informational resources. Every family’s monetary situation is different, and this guide should not be interpreted as giving financial advice – Consumers’ Research are not financial professionals.

Next Steps:

  1. Get to know the schools’ financial aid policies. No one school is the same.
  2. Pay attention to deadlines! If you are applying for federal financial aid, use this site to find your state’s deadlines: https://fafsa.ed.gov/deadlines.htm
    1. Private scholarships have their own set of deadlines, so be sure to do research beforehand to give yourself ample time to prepare and submit.
  3. Apply for federal student aid by filling out the Free Application for Federal Student Aid (FAFSA)
  4. Fill out the PROFILE form by the College Scholarship Service (CSS) if your school shows up on this list: https://profile.collegeboard.org/profile/ppi/participatingInstitutions.aspx
    1. For more information on how to complete the CSS profile, check: https://cssprofile.collegeboard.org/pdf/css-profile-student-guide.pdf
  5. For each year that you are enrolled in college, you and your child will have to reapply for financial aid to account for any changes in information such as income.
  6. Optional: search and apply to scholarships!

Types of Financial Aid

  • Federal Student Aid –
    • Grants
      • Grants do not need to be paid back, as they are amounts of money given to the recipient, and are usually need-based.
      • There are a variety of grants gifted by the federal government:
        • Federal Pell Grants
        • Federal Supplemental Educational Opportunity Grants (FSEOG)
        • Teacher Education Assistance for College and Higher Education (TEACH) Grants
        • Iraq and Afghanistan Service Grants
      • For more information about the different types of grants, click the link below:
      • Loans (from the federal government)
        • https://studentaid.ed.gov/sa/types/loans
        • There are two types of federal student loan programs:
          • William D. Ford Federal Direct Loan (Direct Loan) Program – the largest federal student loan program, and there are four types available:
            • Direct Subsidized Loans
              • Subsidized loans’ interest rate does not accrue while the student is in college. Financial need is needed.
            • Direct Unsubsidized Loans
              • Unsubsidized loans’ interest rate accumulates through the student’s time in school. Financial need is not needed.
            • Direct PLUS Loans
              • For parents borrowing money to pay for their child’s education. Financial need is not needed.
            • Direct Consolidation Loans
              • This option will “combine all of your eligible student loans into a single loan with a single servicer.” Instead of making multiple monthly payments, students can make one payment.
            • Federal Perkins Loan Program
              • For both undergraduate and graduate students who demonstrate “exceptional financial need.”
              • “Under this program, the school is lender.” Eligibility is also based off of the school’s available funds.
            • For an in-depth breakdown of the types of loans and their details (interest rates and maximum award amounts) click the link below:
            • Work-study – federal student aid program that provides part-time employment while you are enrolled in school to help pay your education expenses.
          • Aid outside of federal government
            • CSS Profile
              • The CSS Profile is another online application for non-federal scholarship money, and is used by over 300 colleges and scholarship programs. Again, be sure to check to see if your school uses the CSS Profile since it is not free.
              • Institutional Documentation Service (IDOC)
                • The College Board uses IDOC, or the Institutional Documentation Service, to acquire your family’s federal tax information and other documents.
                • The College Board has a guide for more information and the login can be found here
              • Private programs and sources
                • If you are a high school student, there are many scholarships available that can range from answering an essay prompt to creating a graphic novel. Running a simple Google search for scholarships can help students get a leg up on preparing for college. Be sure to ask your high school for resources, as they may have more experience directing students to local, city-wide, or region-specific scholarships.
                • If you are already in college, your school may offer specific grants and programs. Be sure to regularly check your email, or ask your dean for more information.

To put this information in perspective, below is an infographic from the National Center for Education Statistics (NCES) about how much financial aid is awarded on average to first-time, full-time undergraduate students at 4-year colleges:

Applying for financial aid can be understandably stressful, but, according to the NCES, about 85 percent of first-time, full-time undergraduate students received financial aid. There are different amounts of aid to receive from different sources, so as long as students fill out the necessary forms on time, there is a high likelihood that families will receive aid.

 

Frequently Asked Questions:

  • What is the difference between FAFSA and the CSS Profile?
    • FAFSA is the application for federal grants, loans, and work-study by the U.S. Department of Education. The CSS, however, is administered by the financial aid division of the College Board, and is for private, non-federal aid. It is still important to fill out the CSS/Profile because it is used by over 300 colleges and scholarship providers. An important distinction between the two applications is that the CSS Profile is not free: the initial application fee is $25, and sending it to any additional schools or programs will cost an additional $16. However, according to the College Board’s guide, “fee waivers may be granted to domestic students who are first-time college applicants and who have used a SAT fee waiver, have an income of $45,000 or less, or are an orphan or ward of the court under the age of 24.” The waiver covers up to sending the report to eight colleges.
  • What if my family does not speak English?
    • http://www.understandingfafsa.org/ has guides in multiple languages to help non-English or English-learning speakers how to navigate the FAFSA. They have guides in Spanish, Arabic, Bengali, French, Haitian Creole, Korean, Russian, Traditional Chinese, and Urdu in addition to English.
    • The FAFSA website has a specific site for filling the form out in Spanish:
  • What if I am an undocumented student?
    • While “there is no federal or state law that prohibits the admission of undocumented immigrants to U.S. colleges, public or private,” according to the College Board, the FAFSA website states that undocumented students are not eligible for federal financial aid. Furthermore, they are not eligible for state financial aid in most states, either. The College Board writes that undocumented students may be eligible for private scholarships, as they “set their own financial aid policies.”
    • For more information about federal rules about undocumented students, visit the FAFSA website: https://studentaid.ed.gov/sa/sites/default/files/financial-aid-and-undocumented-students.pdf
  • How should families who do not have a child in college yet prepare for college expenses?
    • Again, Consumers’ Research is not qualified to give financial advice, so discretion is always up to each family.
    • According to Sallie Mae’s report on how American families are saving for college, about 30 percent of parents have 529 Plans, which gives parents “tax advantages that can help their savings grow faster.” In addition to 529 Plans, 22 percent of families have a general savings account, and 14 percent have investment accounts.

Source: Sallie Mae

For more information on 529 plans, the U.S. Securities and Exchange Commission (SEC) has published an introduction to this investment option to their website.

While saving up for college is important, some experts believe that there are other expenses to take precedent over college funds. According to Sally Herigstad, CPA, author of Help! I Can’t Pay My Bills, “There is no such thing as a retirement loan. You must balance the needs of the whole family. Adequate insurance, your retirement plan and buying a house are a few things that may take precedence over college savings.”

According to Better Investing, there are savings alternatives like Roth IRAs and opening a college savings account in the parent’s name. Consulting experts is always advised.

 

Photo Credit: https://www.pexels.com/photo/money-pink-coins-pig-9660/

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